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How Legislators & Advocates Are Taking A Stand Against Spotify's Payola-Like Practices
Back in late 2020, Spotify announced their "Discovery Mode" feature, in which artists could forfeit part of their royalty payment in exchange for increased visibility on the platform's radio and autoplay algorithms. Understandably, this led to controversy within the music creator community.
Now, the federal government is involved. The House Judiciary Committee, which has jurisdiction over many music-related legislative reforms, recently sent Spotify a letter voicing their concerns on the “Discovery Mode” rollout and requesting additional information to ensure it was not encouraging a "race to the bottom."
"At a time when the global pandemic has devastated incomes for musicians and other performers, without a clear path back to pre-pandemic levels, any plan that could ultimately lead to further cut pay for working artists and ultimately potentially less consumer choice raises significant policy issues," declared Chairman Jerrold Nadler (D-N.Y.) and Subcommittee on Courts, Intellectual Property, and the Internet Chairman Hank Johnson (D-Ga.).
"Core copyright industries like music play an integral role in the U.S. economy, and the vitality of the industry is undermined when artists’ hard work is undervalued. Such a race to the bottom threatens to weaken the core goal of copyright and intellectual property—incentivizing creativity by offering a fair return on one’s work."
At a time when music makers struggle in the wake of the COVID-19 pandemic, Spotify is exploring avenues that could undermine the financial stability of the creative workforce. "Discovery Mode" is reminiscent of past payola practices and serves as another reminder that the digital service is more worried about lining their shareholders' pockets than protecting those generating its content.
Payola, or the practice of requiring compensation in return for airplay by broadcasters, decreases the diversity of music included in airplay and provides an unfair barrier of entry for smaller artists. While it is not explicitly illegal for digital streaming services, Spotify’s decision to entice struggling creators to further reduce their royalty is a telltale sign of their extractive impact on the music ecosystem.
The Recording Academy, which first spoke out against this anti-creator policy in the fall, has a history of standing with creators against payola-like schemes. In 2007, the Recording Academy penned a letter to then-Federal Communications Chairman (FCC) Chairman Kevin Martin in support of the FCC's pending payola investigations into Big Radio. The Academy urged the FCC to continue oversight to "ensure that future conduct in violation of the payola laws will not occur" and to intervene if any such conduct occurs.
"Without commenting on any of the specific payola investigations, the Recording Academy has long been concerned about the pernicious impact of payola and related conduct on the availability to the public of diverse sources of music and of the opportunities for artists, including those not affiliated with major recording labels, to have their music played by broadcast stations," the letter read in part.
Other groups in the music industry are joining the Academy in siding with creators against payola-like practices. The Union of Musicians and Allied Workers served Spotify an open letter in response to Discovery Mode, while the American Association of Independent Music (A2IM) and the Artists Rights Alliance penned op-eds in Billboard and Rolling Stone arguing against this new mode.
With the help of Congress, the Recording Academy is confident that Spotify will see reason, reconsider its payola-like practices and—once and for all—begin to pay artists what they deserve.